Is your company ready to work on federal, state, or local construction projects? Here are some guidelines on how to win a government construction contract.
Is your construction company ready to take on challenging federal, state, or local construction projects? Then consider bidding for a government construction contract.
The latest statistics reveal over $120 billion awarded to small businesses in the form of federal contracts. That's about 25% of the government's federal contract budget.
These are rewarding projects building the nation's roads, schools, and other infrastructure. If you're ready to grow your business, take a look at these guidelines for winning a government construction contract.
What Type of Construction Business Can Get a Government Construction Contract?
When it comes to bidding for local construction contracts, you don't have to be a huge company. Even small companies get government contracts. Other types of contractors land government contracts too, including:
- Electrical contractors
- Design-build contractors
- Roofing contractors
- Landscape contractors
If you're ready to consider bidding for local construction contracts, make sure you understand and follow the process.
1. Register with the System for Award Management
You'll need to register your business with the System for Award Management (SAM). The SAM registration is good for one year, so don't forget to renew every year. The government suggests renewing 90 days before your current registration expires.
To register your business with the SAM system, you'll need a Dun & Bradstreet D-U-N-S number. This is a unique number code for each location of your business. The D-U-N-S number is free and you'll request it at the above link.
You'll also need to know the NAICS code that best describes your business. When you get a business license from the state, the code is on the form.
Not sure about your NAICS? You can also search for NAICS codes here. You may use more than one code for your business if you offer more than one service. Most businesses have more than one code.
If any of your business information changes throughout the year, update your SAM profile.
2. Familiarize Yourself with the Small Business Administration
The Small Business Administration (SBA) has tons of basic information on its website. There are a lot of specific rules for submitting a bid with the government. Read about them on the website and educate yourself on the bidding procedures.
It seems overwhelming at first but take your time and read through the material. You don't want to spend precious hours on a bid only to get turned down because you didn't understand the process.
3. Certified Payroll
If you're working on government contracts, you must have WH-347 forms. The WH-347 is a certified payroll form. This form ensures that you've paid your employees in compliance with the law for federal contractors.
Certified payroll proves your employees made the prevailing wage under the law. The government sets the prevailing wage according to the Davis-Bacon Act.
The Davis-Bacon Act protects workers and covers both pay and benefits. The act ensures that contractors won't underbid competitors by underpaying their employees.
4. Contract Location Strategy
Be proactive about finding projects that are up for bid. You can do a search for contracts for which you're interested in bidding here.
If you're bidding in the full and open category, you're competing against every size business so the competition is fierce. Look for contracts in specialized bid categories as a way of narrowing down the competition.
Another way to find jobs? Work as a subcontractor for another business. In this case, the other contractor is the prime contractor with the government contract.
You can search for subcontract business opportunities on the SBA SubNet site. There's a lot of government support for small businesses who want to work on government contracts.
You can even take advantage of free mentoring from SBA's mentoring network. It's called SCORE and there are 300 chapters across the states.
5. Past Performance Evaluation
The General Services Administration offers many lucrative contracts. To be eligible, you'll need a past performance evaluation.
Once you apply for the evaluation, the government initiates an independent audit of your business. They'll use past customer references. Your business gets a performance rating that's based on survey responses as well as past performance data.
It helps to have a lot of satisfied customers! It also helps if you've finished your jobs on time and within or under the agreed-upon budget.
6. Start Small With Careful Consideration
Carefully consider any bid in which you're interested. You don't want to get overwhelmed by bidding for a job that's too big.
Never promise something you can't deliver! You want to make a great impression on your first government contract.
Not all government contract jobs go to the lowest bidder. There are other factors that come into play. Location, minority business status, and past success are other factors that help you earn a contract.
Establish yourself as a reliable, prepared contractor. An established reputation also helps during a recession when the government cuts back on projects. If you're already established, you're more likely to earn government construction bids.
Bidding for a Government Construction Contract
Bidding for a government construction contract isn't the easiest bid you'll ever make, but it could be one of the best and most lucrative contracts you'll get. You'll face plenty of competition and a lot of rules and regulations but it's a great way to expand your business.
Take the time to learn the rules and regulations and familiarize yourself with the Davis-Bacon Act. Get yourself organized and registered and you're ready for governmental construction bidding!
Do you need help with certified payroll? Here at Points North, we'll help you streamline your payroll systems and improve your workflow. Contact us today!
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